Analyst is not optimistic Microsoft will let users install XP on new machines, even though downgrade rights are just as important for Windows 7 as they've been for Vista

Downgrade rights for Windows 7 will be "hugely important," an analyst said Thursday, but he's not optimistic that Microsoft will let users continue to install Windows XP on new machines.

Microsoft has yet to reveal its plans for "downgrades" from Windows 7, the in-development successor to Vista , noted Michael Silver , an analyst with Gartner. But the issue is just as important for Windows 7 as it has been for Vista.

Microsoft confirmed that it's not ready to spell out downgrades for the new OS. "Final decisions are still being made on details like end-user downgrade rights outlined in the applicable product license terms," a company spokeswoman said in an e-mail.

In Microsoft parlance, "downgrade" describes the Windows licensing rights that let users of newer versions replace it with an older edition without having to pay for another license. In effect, the license for the newer Windows is transferred to the older edition.

When Microsoft launched Vista in early 2007, it spelled out limited downgrade rights to the older Windows XP. Only buyers of PCs with pre-installed editions of Vista Business and Vista Ultimate could downgrade, and then only to Windows XP Professional. That path, however, became extremely popular as users balked at migrating to Vista, and instead bought new computers, then downgraded to XP Professional themselves or ordered systems that had been downgraded to XP at the factory.

Microsoft has recognized the continued popularity of XP in the Vista years. In the last three months of 2008, for example, it extended the availability of XP to both small and large computer makers, pushing out cut-off dates to the end of May and July 2009, respectively.

However, Silver is not optimistic that Microsoft will continue the practice and allow customers with Windows 7 licenses to transfer them to XP. "We're extremely confident that Microsoft will offer free downgrade rights [from Windows 7] to Vista," said Silver. "But will Microsoft do the right thing for customers and give them downgrade rights to XP, or will it try to get some additional revenue out of the situation? At this point, it's hard to tell."

Saying he's somewhat "on the fence" about whether Microsoft would, in fact, offer downgrades from Windows 7 to XP, he quickly added, "I think that there's a slightly better chance that they won't."

The problem facing businesses still running Windows XP, said Silver, is that without downgrade rights they would be forced to make a very tough choice when Windows 7 debuts, and presumably sweeps Vista from new PCs.

"For companies running XP that don't have Software Assurance, no downgrade rights means they will have to get machines pre-installed with Vista," he said, describing the first 12 to 18 months after Windows 7's launch. That's when business typically swear off a new operating system as they test it and their applications, or simply wait out the inevitable bugs that pop up early in an OS's life.

"For the first year or so of Windows 7, organizations using XP will either have to buy Software Assurance or pay for a [Windows 7] upgrade later for those Vista machines," said Silver.

Microsoft's Software Assurance, a type of "buyer protection" program that gives companies rights to all upgrades for a specified period in exchange for annual payments, also allows corporate administrators to freely downgrade any edition of Windows.

Silver's doubt about Microsoft's plans for Windows 7 downgrade rights stems in part from hints by the company about sticking to a Vista-only policy. "If it offers only downgrades to Vista, Microsoft will try to say that it's policy [to limit downgrades] only to the last version," he said. "But that's not true. With XP, they gave downgrades to [Windows] 2000 and [Windows] NT 4.0 and [Windows] 98. In other words, there is precedent for downgrades to more than just one version."

Although Microsoft has revealed some details about Windows 7, including the multiple versions it expects to distribute, it continues to keep other information secret, including the prices it will charge for the new OS and the eventual ship date.

As of earlier today, Microsoft has halted all downloads of Windows 7 beta, the only preview it's offered to the general public. Steven Sinofsky, the senior vice president in charge of the Windows engineering group, however, has said that the company will move directly to a release candidate , and skip the usual multiple betas.